MNI: China SAFE Revises Up Q3 Capital/Financial Account

--SAFE Says FX Reserves Increased $58.9 Bln in Jan-Sept vs PBOC's $51.7 Bln Rise

--China Current Account Surplus Equal To 1.3% of GDP

     BEIJING (MNI) - China's State Administration of Foreign Exchange on

Thursday sharply revised up the country's third-quarter capital and financial

account, saying it was in surplus by $14.2 billion, as opposed to last month's

preliminary estimate of a $37.1 billion deficit, which included net error and

omission numbers. 

     The third-quarter surplus was a significant turnaround from the $400

million deficit recorded in the April-July quarter, an indication that capital

flows into China are increasing. 

     China's current account surplus fell to $40.5 billion in the third quarter,

compared with a $50.9 billion surplus in the second quarter, SAFE said.

     The surplus for the consumer goods trade was $120.4 billion in the third

quarter, compared with $132.1 billion in the second quarter, while the deficit

in the services trade was $62.9 billion, compared with $74.4 billion in the

second quarter. 

     For the first three quarters this year, the current account surplus was

$109.8 billion. The capital and financial account surplus was $53.1 billion in

the same period, compared with a preliminary estimate of a surplus of just $1.8

billion, SAFE said. 

     The non-reserve financial account turned to a $112.1 billion surplus in the

first three quarters, compared with a deficit of $313.9 billion in the same

period last year. 

     SAFE attributed the surplus to stable outbound investment and robust

foreign investment in the first three quarters. 

     "The net growth of outbound direct investment assets was $65.1 billion and

that of outbound securities assets was $64.1 billion. Meanwhile, the net

increase of other assets, including overseas deposits and loans, stood at $85.8

billion," SAFE said in the separate statement. 

     From June to September, the foreign liabilities of the country saw net

growth of $85.8 billion, including $87.9 billion of foreign direct investment

and $82.1 billion of foreign investment in domestic securities. 

     The current account surplus in the first three quarters was due to robust

consumer goods imports and exports. "Goods exports and imports increased 10% and

17% in the first three quarters, indicating the improvement in domestic and

overseas demand," SAFE said. 

     SAFE said the current account surplus from January to September was

equivalent to 1.3% of GDP.

     SAFE also said the country's foreign-exchange reserves rose by $58.9

billion during the first three quarters of the year. The People's Bank of China

had previously reported an increase in forex reserves of $51.7 billion during

the same period, but the SAFE figure excludes valuation and exchange rate

changes and is a better reflection of real money flows.

     The regulator noted that the country's international payment situation will

continue to be balanced as overseas demand increases, China's economy remains

within a reasonable range and the domestic financial market further opens up. 

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com

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